9.

duties

The duties of a partner are as follows: i. To carry on the business to the greatest common advantage: Every partner is bound to carry on the business of the firm to the greatest common advantage. In other words, the partner must use his knowledge and skill in the conduct of business to secure maximum benefits for the firm. ii. To be just and faithful to each other: Every partner must be just and faithful to other partners of the firm. Every partner must observe utmost good faith and fairness towards other partners in business activity. iii. To render true accounts: Every partner must render true and proper accounts I his co-partners. Each and every entry in the books must be supported by vouchers and di explanations if demanded by other partners. iv. To provide full information: Every partner must provide full information of activities affecting the firm to the other co-partners. No information should be concealed, kept secret. v. To attend diligently to his duties: Every partner is bound to attend diligently to duties in the conduct of the business of the firm. vi. To work without remuneration: A partner is not entitled to receive any kind remuneration for taking part in the conduct of the business. But in practice, the working partners are generally paid remuneration as per agreement, so also commission in some case.

vii. To indemnify for loss caused by fraud or willful neglect: If any loss is caused to the firm because of a partner's willful neglect in the conduct of the business or fraud commit by him against a third party then such partner must indemnify the firm for the loss. viii. To hold and use partnership property exclusively for the firm: The partners must hold and use the partnership property exclusively for the purpose of business of the firm not for their personal benefit. ix. To account for personal profits: If a partner derives any personal profit from partnership transactions or from the use of the property of the firm or business connection the firm or the firm's name, he must account for such profit and pay it to the firm. x. Not to carry on any competing business: A partner must not carry on competing business to that of the firm. If he carries on and earns any profit then he must account for the profit made and pay it to the firm. xi. To share losses: It is the duty of the partners to bear the losses of the firm. ' partners share the losses equally when there is no agreement or as per their profit share ratio. xii. To act within authority: Every partner is bound to act within the scope of authority. If he exceeds his authority and the firm suffers from any loss, he shall have compensate the firm for such loss. xiii. Duty to be liable jointly and severally:

Every partner is jointly and individual liable to the third parties for all acts of the firm done while he is a partner. xiv. Duty not to assign his interest: A partner cannot assign or transfer his partner interest to an outsider so as to make him the partner of the firm without the consent of other partners. However, he can assign his share of the profit and his share in the assets the firm where the assignee shall not be entitled to interfere in the conduct of the business

10. reconstitution (1) Admission of a New Partner According to the Partnership Act, no new partner can be taken in a firm without the consent of all the existing partners. The new partner when admitted is called incoming partner. An incoming partner is not liable for any act of the firm done before he became a partner.

2. According to Section 31 of the Partnership Act, subject to contract between the partners and to the provision of Section 30, no person shall be introduced as a partner into a firm without the consent of all the existing partners.

3. Subject to provision of Section 30, a person who is introduced as a partner into a firm does not thereby become liable for any act of the firm done before he became a partner.

(2) Retirement of a Partner According to Section 32 of Partnership Act, a partner may retire or withdraw from a firm--

(1) (a) with the consent of all the other partners. (b) In accordance with an express agreement by the partners or (c) Where the partnership is at will, by giving notice in writing to all the other partners of his intention to retire.

(2) An outgoing partner continues to be liable for the debts of the firm before his retirement until he gives a public notice of his retirement. 3) explusion of partner: A partner may be expelled form a firm by majority of the partners onlny if: a) the power to expel has been given bt contract between partners b) the power has been exercised by thy majority of the partners in good faith for the benefit of the firm. The partner who is being expelled must be given reasonable notice and opportuninty to explain his position amd to remove the cause of his expulsion. If the expulsion is malafide the same is viod and the irregualary expelled partner will not cease to be a partner (sec 33)

(4) Insolvency of a Partner When a partner of the firm is declared bankrupt, he then ceases to be a partner from the date of the order of the Court (adjudication). The insolvency of a partner does not necessarily result in the dissolution of the firm. Sec 34

(5) Death of a Partner If the firm consists of only two partners, the death of one partner shall dissolve the partnership. If there are more than 2 partners, the death may not result in the disso of the firm. The partners may agree to carry on the partnership business. Sec 35 11. dissolution

Meaning:- When the relation between all the partners ofthe firm comes to an end, this is called dissolution ofthe firm. Dissolution of partnership is different from the dissolution of firm. When any of the partners dies, retires or become insolvent but if the remaining partners still agree to continue the businessof the partnership firm, then it is dissolution of partnership not the dissolution of firm. Dissolution of partnership changes the mutual relations of the partners. But in case of dissolution of firm, all the relations and the business of the firm comes to an end. Modes of Dissolution:- A firm may be dissolved in any of the following ways:1. By Consent:- A partnership firm can be dissolved any time with the consent of all the partners whether the partnership is at will or for a fixed duration. 2. By Agreement:- A partnership can be dissolved in accordance with the terms of the Partnership Deed or of the separate agreement. 3. Compulsory Dissolution:- In case, any of the following events take place then it becomes compulsory for the firm to dissolute: -

(i) Insolvency of Partners:- In case all the partners or all the partners except one become insolvent. (ii) Unlawful Business:- In case the firms business become unlawful on the happening of a subsequent event. e.g.trading with alien country. 4. Dissolution on the happening of contingent event:- A firm may be dissolved on the happening of any of the following contingent event:-

(i) Expiry of Fixed Period:- If the firm is constituted for fixed period, then the firm is dissolves automatically. (ii) On achievement of specific task:- If the firm has been constituted for the achievement of specific (iii) Death task, of onachievement of Partner:- Death of that any of task, the firm ceases the to exist.

partner

dissolves

partnership.

(iv) Insolvency of Partner:- The insolvency of any of the partner may dissolve the firm. (v) Resignation of Partner:- Resignation by any of the partners dissolves the partnership. 5. Dissolution By Notice:- In case of partnership at will, a partner can dissolve it by giving written notice of dissolution to other partners duly signed by him. 6. Dissolution by Court:- The court may order for the dissolution of the firm on the following grounds:-

(i) Insanity of Partner:- On the application of any of the partner, court may order for the dissolution of the firm if a partner has become of an unsound mind.

(ii) Incapacity of Partner:- If a partner has become permanent in capable of discharging his duties and obligations then court may order for the dissolution of firm on the application of any of the partner.

(iii) Misconduct of Partner:- If any partner other than partner suing is responsible for any loss to the firm, then the courtmay order for the dissolution of the firm.

(iv) Constant breach of agreement by partner:- The court may order for the dissolution of the firm if the partner other than the suing partner is found guilty for constant breach of agreement and it becomes impossible to continue the business with such partner. (v) Transfer of Interest:- When any of the partner other than the suing partner transfers whole of its share to the third party for permanently.

(vi) Continuous Losses:- The court may order for dissolution if the firm is continuously suffering losses and there is no more capital available for the future growth of the firm. (vii) Just and Equitable:- The court may order for dissolution on any other ground which court think is just, fair and equitable. e.g. loss of total confidence between the partners.

12. test of partnership

13. ideal partnership

The Ideal Partnership An ideal partnership is a name given to a successful business. A partnership will be successful when there is proper understanding among partners. All of them work honestly and there is reliance on each other. Though it is a difficult proposition but it becomes an ideal to be achieved by the partners. Mutual trust and good faith: The partners must have trust in each other. They should work honestly for the business and undertake things in good faith. A long acquaintance among partners is necessary for developing mutual faith and trust. The number of partners should be less so that harmonious relations are

created

among

them.

Common Approach: The partners should have common approach and must act in co-ordination. Every one of them should have common interest in mind and work for the welfare of the firm. A spirit of co-operation and service should be the aim of the partners. Equitable Adjustment of Rights: All partners may not have equal share in profits and management but the right of each one of them should be equitable. No one should feel that he is deprived of his just and due share. Written Agreement: The agreement among partners should be in writing and signed by all of them to avoid any type of misunderstanding later on. The agreement should be comprehensive and precise and clearly state mutual rights and obligations of partners. Competent Management: The management of the firm should be in competent hands. There should be consultations among partners but final decision should left to those who have proper experience and ability. Long Duration: A small or medium scale business needs long period to be successful. An ideal partnership should be set up for fairly a long period so that there is a stability and continuity in operations. A longer period also helps in proper understanding among partners. Adequate Capital: There should be sufficient funds to meet both long term and short-term needs of the business. The partners should preferably contribute funds for long term needs while short-term needs may be met from banks and other sources. There should be a plugging back of profits and limits be placed on dealings by partners. Registration: An ideal firm should not suffer from any disadvantage. An unregistered firm cannot enforce its rights against outsiders in the court of law.

The firm should be properly registered even through it is not compulsory under Partnership Act.
14. partnership dead

The formation of partnership requires an understanding among the partners in the form of an agreement because partnership arises not from status but from contract. The partnership agreement may be oral or in writing. In France and Italy, the law makes partnership agreement in written form. The document in which all the important terms and conditions regarding the partnership business are written is called partnership deed. A partnership deed is written agreement which contains terms and conditions as to the relationship of the partners among each other. There is no prescribed Performa for partnership deed but it must be stamped and signed by all the partners. Partnership deed is drawn to avoid misunderstanding and undesirable litigation. Where it is decided to have a partnership deed in written form, it should be stamped according to the provisions of Stamp Act, 1899. It is not regarded as a public document like memorandum of association and articles of association. It is otherwise known as agreement, deed or articles of partnership. A properly drafted partnership deed contains the following points:

The name of the firm and the names of the partners. The place where the head office is situated and the business is carried on. Nature and kinds of business operation. The amount of capital contribution by the partners. The commencement and the duration of partnership. the proportion in which the profits are to be shared. The provisions for interest on capital, if any. Nature of loans and advances and the provisions for interest on loan. The amount of withdrawal to be made by the partners to any partner for this special service to the firm. Provisions for maintenance of books of accounts and the procedure of audit of accounts.

The name of the partners for signing cheques and other important documents. Procedure for valuation of goodwill at the time of admission and retirement. Arbitration clause for settlement of disputes among the partners. Procedure for dissolution of partnership and partnership firm. Provisions for determining the amount of capital payable to the retiring partner or to the heir of a deceased partner. The method of revaluation of assets and liabilities. The procedure of settlement in case of dissolution of partnership.
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15. liabilities of partner on dissolution

16. e.g of partnership or case law